Diamond Sawblades v. United States ( 2021 )

Case: 20-1478 Document: 52 Page: 1 Filed: 01/27/2021
United States Court of Appeals
for the Federal Circuit
______________________
THE DIAMOND SAWBLADES MANUFACTURERS’
COALITION,
Plaintiff-Appellee
v.
UNITED STATES,
Defendant-Appellee
v.
BOSUN TOOLS CO., LTD.,
Defendant-Appellant
______________________
2020-1478
______________________
Appeal from the United States Court of International
Trade in No. 1:17-cv-00167-CRK, Judge Claire R. Kelly.
______________________
Decided: January 27, 2021
______________________
MAUREEN E. THORSON, Wiley Rein, LLP, Washington,
DC, argued for plaintiff-appellee. Also represented by
STEPHANIE MANAKER BELL, TESSA V. CAPELOTO, LAURA EL-
SABAAWI, CYNTHIA CRISTINA GALVEZ, DERICK HOLT, DANIEL
B. PICKARD, ADAM MILAN TESLIK.
JOHN JACOB TODOR, Commercial Litigation Branch,
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2 DIAMOND SAWBLADES v. UNITED STATES
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for defendant-appellee. Also repre-
sented by JEFFREY B. CLARK, JEANNE DAVIDSON, FRANKLIN
E. WHITE, JR.; PAUL KEITH, Office of the Chief Counsel for
Trade Enforcement and Compliance, United States De-
partment of Commerce, Washington, DC.
GREGORY S. MENEGAZ, DeKieffer & Horgan, PLLC,
Washington, DC, argued for defendant-appellant. Also
represented by JAMES KEVIN HORGAN, ALEXANDRA H.
SALZMAN.
______________________
Before PROST, Chief Judge, CLEVENGER and TARANTO,
Circuit Judges.
TARANTO, Circuit Judge.
Since 2006, importation of diamond sawblades from
the People’s Republic of China (PRC) has been governed by
an antidumping duty order issued by the United States De-
partment of Commerce under 19 U.S.C. § 1673. In 2016,
Commerce launched an administrative review, under 19
U.S.C. § 1675, of duties owed on subject merchandise sold
to unaffiliated U.S. purchasers from November 1, 2014,
through October 31, 2015. In that review, Commerce in-
vestigated the dumping margin of Bosun Tools Co., Ltd.
(Bosun), an exporter and producer of diamond sawblades
from the PRC, that it sends directly to one of its two U.S.
importer-affiliates for sale to unaffiliated U.S. purchasers.
The second importer-affiliate imports diamond sawblades
from a Bosun entity in Thailand (which are not covered by
the antidumping duty order). The two importer-affiliates
trade between themselves, so both end up selling PRC-
originating and Thailand-originating sawblades.
To determine the domestic-price component of the
dumping margin calculation, Commerce had to identify
which diamond sawblades sold by the Bosun importer-
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DIAMOND SAWBLADES v. UNITED STATES 3
affiliates to unaffiliated U.S. purchasers were from the
PRC (not Thailand). Because Bosun’s affiliates (and Bo-
sun’s overall database) did not record the country of origin
on each sale to those purchasers, Bosun supplied country-
of-origin information from three sources: (1) the particular
product code (which was country-specific for some prod-
ucts); (2) the unit price (which allowed origin identification
for some products); and (3), for remaining products, an in-
ference as to origin based on the premise that the importer-
affiliates generally sold products in the order they received
them (the first-in, first-out, or FIFO, inference).
To calculate Bosun’s margin, Commerce used the infor-
mation Bosun provided, finding it sufficiently verified. The
domestic-industry Diamond Sawblades Manufacturers’
Coalition challenged Commerce’s determination in the
Court of International Trade, which remanded the matter
to Commerce for further explanation. Diamond Sawblades
Mfrs.’ Coalition v. United States, No. 17-00167, 2018 WL
5281941 (Ct. Int’l Trade Oct. 23, 2018) (DSMC I). On re-
mand, Commerce noted problems with some of Bosun’s in-
formation—perhaps only with the small subset of products
for which the FIFO-inference step was used for origin iden-
tification—and concluded that it would use “the facts oth-
erwise available” under 19 U.S.C. § 1677e(a), and indeed
draw adverse inferences under § 1677e(b), as to the totality
of the Bosun-sawblade sales during the period of review.
The Trade Court affirmed Commerce’s determination. Di-
amond Sawblade Mfrs.’ Coalition v. United States, 415 F.
Supp. 3d 1365, 1369 (Ct. Int’l Trade 2019) (DSMC II).
We now conclude that some of the bases on which Com-
merce invoked § 1677e(a) are unsupported by substantial
evidence, while some—which involve only a gap in reliable
information—are adequately supported. We also conclude,
however, that, in light of the limited bases for applying
§ 1677e(a), Commerce may have applied that subsection—
and hence § 1677e(b), which applies only where subsection
(a) applies—too broadly by disregarding all of Bosun’s
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4 DIAMOND SAWBLADES v. UNITED STATES
country-of-origin information. It appears that the errors
Commerce identified in Bosun’s information are limited in
their reliability-undermining effect to a defined subset of
sold sawblades (the subset of sawblades whose origin Bo-
sun identified only through the FIFO-inference step). If
the unreliable information is confined to some or all saw-
blades within such a defined subset, then there is no sub-
stantial evidence to support Commerce’s determination
that all of the Bosun-supplied origin information was un-
reliable, and Commerce articulated no supported basis for
disregarding the reliable portion of the origin information
Bosun supplied. We remand for further proceedings to de-
termine the extent to which unreliability is so confined,
and the consequence for Bosun’s dumping margin. We
leave to the Trade Court the decision whether a further re-
mand to Commerce is needed.
I
A
Under 19 U.S.C. § 1673, Commerce must determine
whether merchandise at issue is being sold or is likely to
be sold in the United States ‘‘at less than fair value,’’ which
the statute identifies as ‘‘dumping,’’ id. § 1677(34). To
make that determination, Commerce must assess the dif-
ference between the ‘‘normal value’’ of the goods at issue
(reflecting the home-market value) and the ‘‘export price or
constructed export price’’ of those goods (reflecting the
price at which they are sold into the United States). See
id. § 1677b(a) (stating that the determination of the exist-
ence of sales ‘‘at less than fair value’’ is to be based on a
comparison of ‘‘the export price or constructed export price
and normal value’’); see also id. § 1677a (addressing ‘‘export
price’’ and ‘‘constructed export price’’); id. § 1677b (address-
ing ‘‘normal value’’). That difference is the ‘‘dumping mar-
gin.’’ Id. § 1677(35)(A) (defining ‘‘dumping margin’’). If
Commerce finds dumping, and the International Trade
Commission makes specified findings about injury to
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DIAMOND SAWBLADES v. UNITED STATES 5
domestic industries, Commerce is to issue an antidumping
duty order that imposes duties to offset the dumping. Id.
§ 1673.
Thereafter, Commerce typically conducts annual re-
views to determine the antidumping duty margin for a
given 12-month period for relevant exporters. Id. § 1675.
In particular, § 1675(a)(1)(B) states that “[a]t least once
during each 12-month period beginning on the anniversary
of the date of publication[,] . . . [Commerce], if a request for
such a review has been received and after publication of
notice of such review in the Federal Register, shall . . . re-
view, and determine (in accordance with paragraph (2)),
the amount of any antidumping duty,” and, under subsec-
tion (a)(2), “(i) the normal value and export price (or con-
structed export price) of each entry of the subject
merchandise, and (ii) the dumping margin for each such
entry.” Commerce then “shall determine the individual
weighted average dumping margin for each known ex-
porter and producer of the subject merchandise,” id.
§ 1677f–1(c)(1), and may elect to rely on “a sample of ex-
porters, producers, or types of products that is statistically
valid based on the information available” or “exporters and
producers accounting for the largest volume of the subject
merchandise” if “it is not practicable to make individual
[determinations] because of the large number of exporters
or producers involved in the investigation or review,” id.
§ 1677f–1(c)(2).
In the administrative-review context, Commerce’s use
of the collected information is guided in part by 19 U.S.C.
§ 1677e. Subsection (a) states:
If—
(1) necessary information is not available on the
record, or
(2) an interested party or any other person—
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6 DIAMOND SAWBLADES v. UNITED STATES
(A) withholds information that has been re-
quested by the administering authority or the
Commission under this subtitle,
(B) fails to provide such information by the dead-
lines for submission of the information or in the
form and manner requested, subject to subsec-
tions (c)(1) and (e) of section 1677m of this title,
(C) significantly impedes a proceeding under
this subtitle, or
(D) provides such information but the infor-
mation cannot be verified as provided in section
1677m(i) of this title,
[Commerce] shall, subject to section 1677m(d) of
this title, use the facts otherwise available in
reaching the applicable determination under this
subtitle.
Id. § 1677e(a). Where subsection (a) applies, subsection (b)
adds that if an additional condition is also met, Commerce
“may” draw inferences adverse to an interested party “in
selecting from among the facts otherwise available” whose
use subsection (a) authorizes:
If [Commerce] finds that an interested party has
failed to cooperate by not acting to the best of its
ability to comply with a request for information
from [Commerce], [Commerce], in reaching the ap-
plicable determination under this subtitle, may use
an inference that is adverse to the interests of that
party in selecting from among the facts otherwise
available[.]
Id. § 1677e(b).
Section 1677e(a) refers to four portions of 19 U.S.C.
§ 1677m. Two of those are referred to in § 1677e(a)(2)(B).
One is § 1677m(c)(1), which says that, in certain circum-
stances, Commerce must consider an interested party’s
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DIAMOND SAWBLADES v. UNITED STATES 7
inability to submit requested information “in the requested
form and manner” and may modify the requirements to
avoid an unreasonable burden on the party. The other is
§ 1677m(e), which provides that, in a § 1675 review (among
other proceedings), Commerce “shall not decline to con-
sider” party-submitted information needed for Commerce’s
determination, even though the submission does not meet
all Commerce-established requirements, if certain condi-
tions keyed to reliability are nevertheless met. 1
The third subsection of § 1677m to which § 1677e(a) re-
fers (in § 1677e(a)(2)(D)) is § 1677m(i). That subsection
states that verification of information is required in an ad-
ministrative review like this one if, first, certain interested
parties timely request verification and, second, either there
was no verification in the previous two administrative re-
views or there is good cause for a new verification. Id.
§ 1677m(i). The final subsection of § 1677m to which
1 “In reaching a determination under section . . .
1675 of this title [Commerce] shall not decline to consider
information that is submitted by an interested party and is
necessary to the determination but does not meet all the
applicable requirements established by [Commerce], if—
(1) the information is submitted by the deadline estab-
lished for its submission,
(2) the information can be verified,
(3) the information is not so incomplete that it cannot
serve as a reliable basis for reaching the applicable de-
termination,
(4) the interested party has demonstrated that it acted
to the best of its ability in providing the information and
meeting the requirements established by the adminis-
tering authority or the Commission with respect to the
information, and
(5) the information can be used without undue difficul-
ties.” Id. § 1677m(e).
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8 DIAMOND SAWBLADES v. UNITED STATES
§ 1677e(a) refers is § 1677m(d), referred to in § 1677e(a)’s
concluding clause—Commerce “shall, subject to section
1677m(d) of this title, use the facts otherwise available . . .
.” Subsection 1677m(d) provides, first, that if a response to
an information request “does not comply with the request,”
Commerce “shall, to the extent practicable, provide . . . an
opportunity to remedy or explain the deficiency in light of
the time limits” set for the proceeding and, second, that if
a further submission made in response to the deficiency is
untimely or Commerce “finds that such response is not sat-
isfactory,” Commerce “may, subject to subsection (e)
[quoted supra], disregard all or part of the original and sub-
sequent responses.” Id. § 1677m(d). 2
Interested parties, including foreign producers or ex-
porters of subject merchandise, importers of such merchan-
dise, and specified domestic trade associations, are allowed
to participate in administrative reviews. See 19 U.S.C.
§ 1677(9)(A), (E); 19 C.F.R. § 351.309(c). An interested
2 “If [Commerce] determines that a response to a re-
quest for information under this subtitle does not comply
with the request, [Commerce] shall promptly inform the
person submitting the response of the nature of the defi-
ciency and shall, to the extent practicable, provide that per-
son with an opportunity to remedy or explain the deficiency
in light of the time limits established for the completion of
investigations or reviews under this subtitle. If that person
submits further information in response to such deficiency
and either—
(1) [Commerce] finds that such response is not satis-
factory, or
(2) such response is not submitted within the applica-
ble time limits,
then [Commerce] may, subject to subsection (e), disregard
all or part of the original and subsequent responses.” Id.§ 1677m(d).
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DIAMOND SAWBLADES v. UNITED STATES 9
party that was a party before Commerce may file an action
in the Trade Court under 19 U.S.C. § 1516a to challenge
Commerce’s final determination in an administrative re-
view. 28 U.S.C. § 2631(c); id. § 1581(c).
B
Commerce issued an antidumping duty order in 2006
covering “diamond sawblades and parts thereof” (hereafter
“sawblades”) from the PRC. Final Determination of Sales
at Less Than Fair Value and Final Partial Affirmative De-
termination of Critical Circumstances: Diamond Saw-
blades and Parts Thereof from the People’s Republic of
China, 71 Fed. Reg. 29,303 (May 22, 2006). Commerce
thereafter conducted annual administrative reviews under
19 U.S.C. § 1675. This case involves the sixth such review,
initiated on January 7, 2016. Initiation of Antidumping
and Countervailing Duty Admin. Revs., 81 Fed. Reg. 736(Jan. 7, 2016).
1
Commerce initially selected Jiangsu Fengtai Diamond
Tool Manufacture Co., Ltd. (Jiangsu), the largest exporter
of sawblades from the PRC, along with a second firm, for
individual investigation, but on April 27, 2016, Commerce,
while retaining Jiangsu for investigation, dropped the ini-
tially selected second firm and substituted Bosun—which
was the third largest sawblades exporter listed on the ini-
tiation notice and which had been selected for individual
investigation in three earlier annual reviews. J.A. 56–57.
Bosun responded to Section A of Commerce’s antidumping
questionnaire on May 25, 2016, and Sections C and D on
July 1, 2016. Bosun’s responses included aggregate data
about the quantity and value of its U.S. sales. J.A. 785–93.
Bosun explained that it imported sawblades both from the
PRC and from Thailand through its U.S.-based affiliated
importers; specifically, Bosun Tools, Inc. (Bosun USA) im-
ported only from the PRC; Pioneer Tools, Inc. (Pioneer) im-
ported only from Thailand. J.A. 732. Bosun’s responses
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10 DIAMOND SAWBLADES v. UNITED STATES
also noted that its two importer-affiliates sold sawblades
between themselves before selling to unaffiliated U.S. cus-
tomers, thus intermixing the PRC and Thailand sawblades
in the affiliates’ hands. J.A. 732. It is undisputed that Bo-
sun’s U.S.-sales database, which operated as an omnibus
repository for both importers’ sales records, did not record
the intra-family sales and did not record the country of
origin of sawblades at the time they were sold by the im-
porter-affiliates to unaffiliated U.S. customers (the sales
that matter for the annual review). J.A. 732–33, 2886. Bo-
sun accepts that its importer-affiliates did not record the
country of origin, on invoices or otherwise, at the time of
sale of sawblades to unaffiliated U.S. customers. See
DSMC I, 2018 WL 5281941, at *2. Bosun told Commerce
that it had derived the origin of sawblades sales by using a
multistep method: The product codes for the sawblades of-
ten distinguished the country of origin; the unit prices of
sales did so for some of the sawblades whose origin was not
identified in the first step; and a premise that the importer-
affiliates sold on a “first-purchase first-sale” basis allowed
an inference as to origin for remaining sales, using the
sales dates along with the dates of the affiliates’ receipt of
sawblades. J.A. 733–34.
On August 3, 2016, Commerce issued a first supple-
mental questionnaire asking Bosun to describe how Pio-
neer “segregated subject merchandise [i.e., sawblades from
the PRC] from diamond sawblades that it purchased from
Thailand.” J.A. 1141; J.A. 2967 n.82. Bosun responded on
September 7, 2016, explaining that Pioneer purchased
sawblades only from Bosun’s Thai affiliate and from Bosun
USA, so the subject merchandise in Pioneer’s sales records
would be only those products purchased from Bosun USA.
J.A. 1155. Bosun also elaborated on its earlier explanation
of the method by which it had segregated the subject mer-
chandise, i.e., identified the PRC-origin sawblades. First,
Bosun identified models of sawblades by identifying unique
“product codes” assigned to each affiliate; if those codes
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DIAMOND SAWBLADES v. UNITED STATES 11
were not affiliated with Bosun USA, the sale was not of
subject merchandise. J.A. 1141–42, 1154–56. Second, Bo-
sun compared the unit purchase price of sawblades whose
origin had not been identified based on the product code to
the unit purchase price of sawblades whose origin had been
so identified. Id. Third, for sawblade sales by affiliates to
unaffiliated customers for which the first two steps did not
identify the country of origin, Bosun applied what the par-
ties now call a FIFO inference, based on the assumption
that Bosun’s U.S. affiliates sold their oldest inventory first
(and knew the dates of sales and arrivals of inventory). Id.Commerce issued a second supplemental questionnaire
on October 17, 2016, asking that Bosun “provide a key to
the product codes of Bosun’s subject merchandise” and “ex-
plain how you identified these products as produced in
China and exported from China, produced in Thailand and
exported from Thailand, or produced in China and exported
through Thailand.” J.A. 2139–40; J.A. 2968 n.84. Bosun
timely responded to the second supplemental question-
naire on November 10, 2016, illustrating the already-de-
scribed process as applied to certain “sales trace[s]”—
seemingly the sequence of documents in Bosun’s sales da-
tabase that culminated in the invoice to an unaffiliated
U.S. customer. J.A. 2140–42.
Commerce published its preliminary results on Decem-
ber 9, 2016. See Diamond Sawblades and Parts Thereof
From the People’s Republic of China: Preliminary Results
of Antidumping Duty Admin. Rev.; 2014–2015, 81 Fed.
Reg. 89,045 (Dec. 9, 2016). On January 17, 2017, Diamond
Sawblades requested, as an interested party under 19
C.F.R. § 351.309(c), that Commerce invoke 19 U.S.C.
§ 1677e(a) and (b) to use adverse inferences in calculating
Bosun’s export prices (and hence dumping margin). J.A.
2578–87. Diamond Sawblades argued, in particular, that
Bosun’s information about country of origin was defective
and that Bosun did not cooperate to the best of its ability
because it and its importer-affiliates did not record the
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12 DIAMOND SAWBLADES v. UNITED STATES
country of origin for each individual sale to an unaffiliated
U.S. customer (or therefore have such records to provide to
Commerce). J.A. 2579–87.
Commerce issued a letter on April 28, 2017, informing
Bosun that it would verify Bosun’s questionnaire re-
sponses, and asking Bosun to provide a number of “sales-
trace package[s]” for sales that Commerce identified. J.A.
2612, 2619. On May 27, 2017, Commerce issued its verifi-
cation report (2017 Verification Report), which explained
that the analysts “recreated [Bosun’s] segregation between
Chinese and Thai origin products” and “found no discrep-
ancies” in the first two steps of Bosun’s method. J.A. 2891–
92. The 2017 Verification Report also stated that one of the
identified sales traces reported a lower quantity of PRC-
originating products than had actually occurred, J.A.
2892–93, a discrepancy that was “a result of the FIFO
methodology Bosun used to identify the country of origin,”
J.A. 2892. The report stated, however, that “[o]ther than
the on-site selected sales trace 6, [the analysts] did not find
discrepancies in the sales traces that [they] reviewed for
sales identification methodology.” J.A. 2893.
2
Commerce issued its final Issues and Decision Memo-
randum on June 6, 2017, recommending that Commerce
use Bosun’s verified data to calculate the proper antidump-
ing duty margin. J.A. 2942, 2966. Commerce published its
final results based on that conclusion (Final Determina-
tion) on June 12, 2017. Diamond Sawblades and Parts
Thereof From the People’s Republic of China: Final Results
of Antidumping Duty Admin. Rev.; 2014–2015, 82 Fed.
Reg. 26,912 (June 12, 2017). In the memorandum, Com-
merce explained that it would not apply “the facts other-
wise available” under 19 U.S.C. § 1677e(a) or, therefore,
draw adverse inferences in selecting from such facts under
§ 1677e(b). J.A. 2967–70.
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DIAMOND SAWBLADES v. UNITED STATES 13
Diamond Sawblades challenged Commerce’s determi-
nation before the Trade Court on June 27, 2017, alleging
that Commerce should have applied 19 U.S.C. § 1677e(a)
and (b) in calculating Bosun’s dumping margin. The Trade
Court decided that a remand was warranted on this issue.
Quoting Peer Bearing Co.-Changshan v. United States, 766
F.3d 1396, 1400 (Fed. Cir. 2014), and Nippon Steel Corp. v.
United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003), the
Trade Court concluded that it was unclear if Commerce
sufficiently considered precedent to the effect that “the
‘best of its ability’ standard ‘requires the respondent to do
the maximum it is able to do,’ inclusive of ‘maintain[ing]
full and complete records’ of relevant data.” DSMC I, 2018
WL 5281941, at *4 (alteration in original); see also id. at
*4–7. The Trade Court considered both of the “best of its
ability” statutory provisions quoted above: § 1677m(e)’s cri-
terion for using information that does not meet all Com-
merce requirements (the interested party “acted to the best
of its ability in providing the information and meeting
[Commerce’s] requirements”), which plays a role in
§ 1677e(a)(2)(B) and (indirectly) in the last clause of
§ 1677e(a); and § 1677e(b)’s precondition to using an ad-
verse inference (“an interested party has failed to cooperate
by not acting to the best of its ability to comply with a re-
quest for information from” Commerce). DSMC I, 2018 WL
5281941, at *4–8. The Trade Court also noted that Com-
merce, during verification, had identified errors in Bosun’s
information regarding some of the sales for which the FIFO
step was used to infer origin; and the court concluded that
Commerce had not sufficiently explained its determination
that the errors were isolated enough not to warrant use of
an adverse inference under § 1677e(b). Id. at *7–8. The
Trade Court remanded for further explanation. Id. at *8.
3
Commerce issued a Final Remand Redetermination on
April 17, 2019. This time, Commerce found § 1677e appli-
cable, disregarded all of Bosun’s information about the
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14 DIAMOND SAWBLADES v. UNITED STATES
country of origin for all of its importer-affiliates’ sales dur-
ing the period of review, and assigned Bosun an antidump-
ing dumping margin of 82.05%. J.A. 3048–51, 3062–63.
That figure was the margin Commerce assigned to
Jiangsu, the other individually investigated exporter;
Jiangsu’s margin was itself based on adverse inferences
under § 1677e(b). J.A. 3062 (citing J.A. 2945–54).
As to the premises of its new conclusion: Commerce
reasoned that it would “resort to the facts otherwise avail-
able” under § 1677e(a) because four of the statutorily spec-
ified conditions for doing so were met here. J.A. 3046
(relying on § 1677e(a)(1), (a)(2)(B)–(D)). Commerce noted
that it had identified certain errors in Bosun’s information
during verification, referring specifically (perhaps only—
this is unclear) to sales for which “the FIFO methodology”
was used. J.A. 3049 & n.37. Commerce disregarded all of
Bosun’s information about origin for the entirety of the im-
porter-affiliates’ sales, even the sales for which Bosun iden-
tified origin based on product type or unit price. J.A. 3049.
It stated that “Bosun had the ability to maintain [country-
of-origin] records” at the point of sale to unaffiliated U.S.
purchasers, “but failed to do so,” and that “Bosun is famil-
iar with Commerce’s antidumping duty proceedings and
should have understood the importance of maintaining ad-
equate country of origin information.” J.A. 3047. On that
basis, Commerce declared Bosun’s information in its en-
tirety “‘not satisfactory,’” leaving Commerce with “no reli-
able information on the country of origin of Bosun’s sales.”
J.A. 3049 (quoting § 1677m(d)). Finally, having decided to
disregard all of Bosun’s origin information, Commerce con-
cluded that, in selecting from the information otherwise
available, it should use an adverse inference under
§ 1677e(b) because Bosun flunked the “best of its ability”
standard of that subsection when it failed to maintain
point-of-sale records. J.A. 3048–49, 3058–59, 3062. For
that reason, Commerce used the § 1677e(b)-based Jiangsu
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DIAMOND SAWBLADES v. UNITED STATES 15
margin for Bosun (applying that margin to the imports cov-
ered by the administrative review). J.A. 3050, 3062–63.
Bosun challenged Commerce’s remand redetermina-
tion at the Trade Court. One of Bosun’s arguments was
that the errors identified during the verification stage all
fell into a circumscribed subset of the affiliates’ sales dur-
ing the period of review, representing less than 2.5% of the
total volume of such sales (by unit, not value). J.A. 3075–
76. The Trade Court affirmed the Final Remand Redeter-
mination, concluding that the failure to make a record of
origin at the point of sale by the importer-affiliates, to-
gether with the errors identified by Commerce during ver-
ification, supported Commerce’s invocation of both
§ 1677e(a) and § 1677e(b). DSMC II, 415 F. Supp. 3d at
1370–73.
The Trade Court entered a final judgment on December
16, 2019. Bosun timely appealed. We have jurisdiction un-
der 28 U.S.C. § 1295(a)(5).
II
A
Bosun challenges the Trade Court’s decision in
DSMC I insofar as it remanded the matter to Commerce
for additional explanation. We reject this challenge.
“We review decisions of the Court of International
Trade that remand decisions of the Commission for further
explanation (based on an inability to evaluate on the basis
of the record before the court) with the more deferential
abuse-of-discretion standard.” Diamond Sawblades Mfrs.’
Coalition v. United States, 612 F.3d 1348, 1356 (Fed. Cir.
2010). “In reviewing the trial court’s discretion, this court
examines its reasons for remand for any legal error.” Id. at
1359 (internal quotation marks omitted). Remands are
common, and they serve an important function—to ensure
the adequacy of agency explanation that is crucial to judi-
cial review, including review of whether substantial
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16 DIAMOND SAWBLADES v. UNITED STATES
evidence exists for the premises of Commerce’s exercise of
discretion. See, e.g., CP Kelco US, Inc. v. United States, 949
F.3d 1348, 1355 (Fed. Cir. 2020) (four remands by Trade
Court for further explanation); Mid Continent Steel & Wire,
Inc. v. United States, 941 F.3d 530, 537–38 (Fed. Cir. 2019).
We see no abuse of discretion in the remand in the present
matter.
The Trade Court in DSMC I expressed reasonable un-
certainty about whether Commerce had properly consid-
ered the two “best of its ability” standards regarding a
person’s supply of information—the one in 19 U.S.C.
§ 1677e(b); and the one in 19 U.S.C. § 1677m(e) (a subsec-
tion referred to directly in § 1677e(a)(2)(B) and indirectly
through the concluding phrase of § 1677e(a)’s reference to
§ 1677m(d), which refers to § 1677m(e)). For purposes of
assessing the DSMC I remand, Bosun has shown no mate-
rial legal error in the Trade Court’s view of this court’s
precedents, which explain, while focusing on § 1677e(b),
that the “best of [a person’s] ability,” in proper circum-
stances, may be tested by reference to the person’s pre-
questionnaire recordkeeping. See Peer Bearing, 766 F.3d
at 1400; Nippon Steel, 337 F.3d at 1382. Nor has Bosun
shown an abuse of discretion on the particular facts. Spe-
cifically, we see no abuse of discretion in the Trade Court
decision to remand for a fuller explanation from Commerce
of its initial judgment that the standards did not apply,
even in part, to Bosun’s recordkeeping, given that country
of origin was not recorded at the point of sale to the first
unaffiliated U.S. purchaser.
The Trade Court also reasonably sought additional ex-
planation from Commerce about the ramifications of the
errors Commerce identified in verifying Bosun’s submis-
sions. Noting Commerce’s examination of four sales traces,
the court stated: “Given the maximum sample size of four
sales traces, Commerce’s conclusion that the error [in Bo-
sun’s FIFO methodology] was ‘isolated’ and did not affect
other sales is not sufficiently explained.” DSMC I, 2018
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DIAMOND SAWBLADES v. UNITED STATES 17
WL 5281941, at *7. The Trade Court suggested that the
errors all involved sales whose origin Bosun had used the
FIFO step to identify, but that fact left a question about
why Commerce had not applied § 1677e to any of the Bosun
sales, not even the full subset of sales for which Bosun had
relied on the FIFO step. The Trade Court reasonably con-
cluded: “[E]ven if the FIFO step was applied only in the last
resort, Commerce has yet to explain its conclusion that the
error discovered at verification was not replicated in other
sales, which were not reviewed at verification, to which the
FIFO step applied.” Id. at *8.
In short, the Trade Court’s DSMC I remand to Com-
merce for further explanation was not an abuse of discre-
tion.
B
Bosun also challenges the Trade Court’s affirmance, in
DSMC II, of Commerce’s Remand Redetermination. We
agree in part with this challenge.
On this appeal from the Trade Court, we carefully con-
sider that court’s informed opinion, US Magnesium LLC v.
United States, 839 F.3d 1023, 1027 (Fed. Cir. 2016) (citing
Diamond Sawblades, 612 F.3d at 1356), but we must apply
the same standard of review in considering the challenges
to Commerce’s actions as the standard that was applicable
in the Trade Court, Apex Exports v. United States, 777 F.3d
1373, 1377 (Fed. Cir. 2015). For a final determination un-
der 19 U.S.C. § 1675, we consider whether Commerce’s de-
cision is “unsupported by substantial evidence on the
record, or otherwise not in accordance with law.” 19 U.S.C.
§ 1516a(b)(1)(B)(i); see Ta Chen Stainless Steel Pipe, Inc. v.
United States, 298 F.3d 1330, 1335 (Fed. Cir. 2002). We
generally decide legal issues de novo, CP Kelco US, 949
F.3d at 1356; and here, there is no invocation of deference
under Chevron U.S.A., Inc. v. National Resources Defense
Council, Inc., 467 U.S. 837 (1984), and no legal issue we
decide for which such deference would make a difference.
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18 DIAMOND SAWBLADES v. UNITED STATES
We review factual determinations, including determina-
tions of facts relevant to application of 19 U.S.C. § 1677e(a)
and (b), for substantial-evidence support, which is “such
relevant evidence as a reasonable mind might accept as ad-
equate to support a conclusion,” considering “the record as
a whole, including evidence that supports as well as evi-
dence that ‘fairly detracts from the substantiality of the ev-
idence.’” Nippon Steel, 337 F.3d at 1379; see also Universal
Camera Corp. v. NLRB, 340 U.S. 474, 487–88 (1951); Con-
sol. Edison Co. v. NLRB, 305 U.S. 197, 229 (1938); In re
Gartside, 203 F.3d 1305, 1312 (Fed. Cir. 2000).
Bosun challenges Commerce’s choice to disregard the
entirety of its origin information, and to turn to “the facts
otherwise available” for all of the period-of-review U.S.
sales, as an application of § 1677e(a) not supported by sub-
stantial evidence. Bosun Opening Br. at 24–26, 42–46. We
agree with Bosun’s challenge in part. We address the pre-
conditions to use of “the facts otherwise available” and then
the premise for Commerce’s decision to disregard all of Bo-
sun’s origin information as unreliable.
1
Under 19 U.S.C. § 1677e(a), Commerce “shall” resort to
“the facts otherwise available” (subject to § 1677m(d))
when any of five preconditions are met. The first precon-
dition, stated by itself in paragraph (1), is not tied to the
conduct of any interested party or other person: it is simply
that “necessary information is not available on the record.”
Id. § 1677e(a)(1). The other four preconditions, stated in
paragraph (2), are tied to the conduct of “an interested
party or any other person”: Each specifies conduct of a per-
son that triggers the directive to Commerce to “use the
facts otherwise available.” Id. § 1677e(a)(2)(A)–(D). In its
Remand Redetermination in this matter, Commerce in-
voked four of the five preconditions for such use. J.A. 3046.
We find substantial-evidence support as to two of them.
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DIAMOND SAWBLADES v. UNITED STATES 19
The one that Commerce did not rely on is
§ 1677e(a)(2)(A), which requires that a person have
“withh[e]ld[] information that has been requested” by Com-
merce. 19 U.S.C. § 1677e(a)(2)(A). Commerce did not find
that Bosun withheld requested information.
Commerce found that § 1677e(a)(2)(C) applies. That
provision applies here only if Bosun “significantly im-
pede[d] the proceeding.” Id. § 1677e(a)(2)(C). Although
Commerce so found, that finding is not supported by sub-
stantial evidence. Commerce has not identified a withhold-
ing or misrepresentation of information that lengthened or
otherwise impeded the proceeding. Cf. Ad Hoc Shrimp
Trade Action Comm. v. United States, 802 F.3d 1339, 1355
(Fed. Cir. 2015). Indeed, Commerce has not identified any
additional effort it had to expend because of Bosun’s report-
ing method that it would not have expended if point-of-
sales records had been kept. For example, Commerce did
not find, and the record supplies no basis for finding, that
Commerce would have accepted such records without veri-
fication under 19 U.S.C. § 1677m(i) or with a less burden-
some verification effort than the one Commerce actually
expended.
Commerce also found that § 1677e(a)(2)(B) applies
here. For that provision to apply, the record must support
a finding that Bosun “fail[ed] to provide [necessary] infor-
mation by the deadlines for submission of the information
or in the form and manner requested, subject to subsec-
tions (c)(1) and (e) of section 1677m of this title.” 19 U.S.C.
§ 1677e(a)(2)(B). But the record does not contain substan-
tial evidence to support such a finding.
Commerce did not find that Bosun missed a deadline
in providing requested information. Cf. Dongtai Peak
Honey Indus. Co. v. United States, 777 F.3d 1343, 1355–56
(Fed. Cir. 2015). Commerce did find that Bosun failed to
provide information “in the form and manner requested,”
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20 DIAMOND SAWBLADES v. UNITED STATES
but that finding is not supported by substantial evidence. 3
Commerce has not identified any language in its requests
to Bosun that specified a particular form or manner of the
country-of-origin information Bosun should submit. See
generally J.A. 732, 1140–41, 2140. Commerce’s initial
questionnaire asked that Bosun provide “a chart for report-
ing the sales quantity and value,” which Bosun provided.
J.A. 65, 84–85. Commerce asked in questionnaire Section
C that Bosun “prepare a separate computer data file con-
taining each sale made during the [period of review],”
which Bosun provided. J.A. 735, 784–91. The 2017 Verifi-
cation Report addressing Bosun’s information similarly
recognized that Bosun provided the pre-selected “sales
trace packages” Commerce requested, J.A. 2889, and also
provided Microsoft Excel spreadsheets (i.e., a “computer
data file,” as requested) that assisted Commerce’s inquiry,
J.A. 2890. Although the Trade Court spoke of Commerce
having requested “direct” origin information, DSMC II, 415
F. Supp. 3d at 1371, Commerce has supplied no evidentiary
support for that characterization.
For those reasons, essential requirements for applica-
bility of § 1677e(a)(2)(B) are not met here. It is immaterial,
in this circumstance, whether the “subject to subsections
(c)(1) and (e) of section 1677m” phrase is met. That phrase
merely obliges Commerce to consider excusing deadline or
form-or-manner violations in certain situations. It has no
application when there is no evidence-supported deadline
or form-or-manner violation in the first place, as here.
Commerce found applicable two other triggers for the
use of the facts otherwise available under § 1677e(a). It
3 Contrary to a contention made by Diamond Saw-
blades, but not by Commerce, we think that Bosun suffi-
ciently challenged the applicability of § 1677e(a)(2)(B) in
the Trade Court when it argued that the information it pro-
vided complied with Commerce’s requests.
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DIAMOND SAWBLADES v. UNITED STATES 21
found that “necessary information is not available on the
record,” 19 U.S.C. § 1677e(a)(1), and, referring to infor-
mation requested by Commerce, that Bosun “provide[d]
such information but the information cannot be verified,”
id. § 1677e(a)(2)(D). Substantial evidence supports the
finding as to the second and, a fortiori, as to the first. Dur-
ing verification Commerce found problems in several of Bo-
sun’s origin identifications; and putting to one side the
important question of how much of Bosun’s overall origin
information those problems render unreliable, we think it
clear that Commerce could reasonably find the problems
sufficient to deem unreliable at least a portion of Bosun’s
information, i.e., the portion resorting to the FIFO step for
identifying the origin of particular U.S. sales. See J.A.
3049, 3061; see also DSMC II, 415 F. Supp. 3d at 1371. As
to those sales, the evidence supports a finding that the in-
formation submitted could not be adequately verified and
that, as a result, origin information about those sales was
missing. Commerce therefore properly found § 1677e(a) to
apply in this matter.
2
Having permissibly concluded that there were (limited)
bases for applying the command to use “the facts otherwise
available” under § 1677e(a), Commerce had to determine,
under the “otherwise” language, which facts constituted
“other[]” facts that had to be disregarded. Commerce ulti-
mately concluded that it would disregard all of Bosun’s
origin information. J.A. 3049. The basis on which Com-
merce did so, however, leaves a significant question about
substantial-evidence support, and the answer to that ques-
tion seems consequential, because the record appears to
suggest that there is no sufficient support for disregarding
more than 2.5% of the U.S. sales of Bosun’s affiliates.
Commerce did not decide that the “otherwise” phrase,
without more, itself demands, or should be interpreted to
demand, disregard of all information of any person whose
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22 DIAMOND SAWBLADES v. UNITED STATES
conduct comes within one of the § 1677e(a) preconditions,
even if the only applicable preconditions are § 1677e(a)(1)
and (a)(2)(D) and most of the information that person sup-
plied is verified and not otherwise soundly deemed unreli-
able. Nor did Commerce advance a categorical position of
that sort when it relied on § 1677m(d), to which § 1677e(a)
refers in its concluding phrase. Subsection 1677m(d) states
that, in certain circumstances involving a person’s submis-
sion attempting to cure an earlier failure to “comply with
[an information] request,” if Commerce finds the submis-
sion “not satisfactory,” it “may, subject to subsection (e),
disregard all or part of the original and subsequent re-
sponses.” 19 U.S.C. § 1677m(d). We may assume arguendo
that the provision applies here. When Commerce invoked
the provision, by deeming Bosun’s submissions unsatisfac-
tory, it did not say that it was applying § 1677m(d)’s “dis-
regard” clause based on a policy decision to disregard all of
the Bosun-supplied origin information no matter how lim-
ited the basis was for finding Bosun’s information not sat-
isfactory, i.e., even if the reliability-undermining effect of
any deficiency was cabined.
Commerce likewise asserted no such position based on
§ 1677m(e). That provision, which does not directly apply
here because there is no supported finding under
§ 1677e(a)(2)(B), is only of indirect relevance to § 1677e(a)
in this matter based on § 1677e(a)’s statement that Com-
merce’s use of the facts otherwise available is “subject to
section 1677m(d)”—which itself authorizes disregard of in-
formation only “subject to [§ 1677m(e)].” Section 1677m(e)
on its face is only a requirement that Commerce sometimes
use party-supplied information that, in the absence of the
requirement, Commerce could or must disregard; its lan-
guage is not a directive to expand the amount of party-sup-
plied information Commerce must disregard. Regardless,
Commerce did not, under this clause, adopt a position that
it would disregard all reliable information submitted by a
person that includes some unverifiable information within
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DIAMOND SAWBLADES v. UNITED STATES 23
§ 1677e(a)(2)(D), whenever the person did not act to the
best of its ability in keeping records.
Such rationales, had Commerce adopted them, would
raise serious questions in a case like this one, where only
§ 1677e(a)(1) and (a)(2)(D) undergird application of
§ 1677e(a), about conformity to the statutory policies that
must guide any agency’s exercise of discretion. See, e.g.,
Judulang v. Holder, 565 U.S. 42, 55 (2011) (discussing
“may” authority in 8 U.S.C. § 1182(c) (1994)). We have ex-
plained that “[a]n overriding purpose of Commerce’s ad-
ministration of antidumping laws is to calculate dumping
margins as accurately as possible.” Yangzhou Bestpak
Gifts & Crafts Co. v. United States, 716 F.3d 1370, 1379
(Fed. Cir. 2013) (citing Rhone Poulenc, Inc. v. United
States, 899 F.2d 1185, 1191 (Fed. Cir. 1990)); see also Mid
Continent Steel, 941 F.3d at 542. More particularly, we
have often focused, when applying § 1677e(a), on the sub-
section’s role as a command to Commerce “to fill a gap in
the record” when information is missing or compromised.
Zhejiang DunAn Hetian Metal Co., Ltd. v. United States,
652 F.3d 1333, 1348 (Fed. Cir. 2011); see also Nippon Steel,
337 F.3d at 1381. To the extent that information supplied
is reliable, i.e., not in fact tainted by its supplier’s conduct,
“gap” seems an inapt characterization. And the authorita-
tive Statement of Administrative Action, see 19 U.S.C.
§ 3512(d), states that subsection 1677e(a) pertains to situ-
ations “where requested information is missing from the
record or cannot be used because, for example, it has not
been provided, it was provided late, or Commerce could not
verify the information,” and when needed information is
missing, Commerce “must make [its] determinations based
on all evidence of record, weighing the record evidence to
determine that which is most probative of the issue under
consideration,” H.R. Doc. No. 103-316, vol. 1, at 869 (1994),
reprinted in 1994 U.S.C.C.A.N. 4040, 4179. That explana-
tion, on its own, suggests an information-specific consider-
ation of probativeness rather than any blanket disregard
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24 DIAMOND SAWBLADES v. UNITED STATES
of all information supplied by a person whenever some of
the information supplied by that person is unreliable. 4
Notably, this is not a case involving withholding of in-
formation, failure to meet timing, form, or manner require-
ments, or significant impeding of a proceeding, under
§ 1677e(a)(2)(A), (B), and (C). Such situations implicate a
policy of cooperation with Commerce that is evident on the
face of those statutory provisions, as it is evident on the
face of § 1677e(b). The relevance of such a policy is not as
facially evident at the § 1677e(a) stage where, as here, ap-
plying § 1677e(a) involves only missing or unverifiable in-
formation, under § 1677e(a)(1) and (a)(2)(D). We need not
go further than note the facial difference between these
and the other preconditions for application of § 1677e(a).
In particular, we do not pursue a full statutory analysis or,
therefore, conclude that Commerce is statutorily precluded
from doing more than filling in gaps in reliable information
when applying § 1677e(a) even when the only precondi-
tions are § 1677e(a)(1) and (a)(2)(D).
We need not confront questions raised about a blanket
policy of that sort because Commerce did not announce (or
4 See also Shandong Rongxin Imp. & Exp. Co. v.
United States, 355 F. Supp. 3d 1365, 1370 (Ct. Int’l Trade
2019) (“This subsection thus gives Commerce a way to fill
informational gaps in the administrative record.”); Xiping
Opeck Food Co. v. United States, 34 F. Supp. 3d 1331, 1347
(Ct. Int’l Trade 2014) (“Commerce shall fill in the gaps with
‘facts otherwise available’ if any respondent significantly
impedes the Department’s ability to conduct a proceeding.”
(citing Nippon Steel, 337 F.3d at 1381)); Dorbest Ltd. v.
United States, 462 F. Supp. 2d 1262, 1318 (Ct. Int’l Trade
2006) (“Section 1677e(a) requires that there be a gap in the
record of verifiable information due to a party’s failure to
supply necessary or reliable information in response to an
information request from Commerce.”).
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DIAMOND SAWBLADES v. UNITED STATES 25
therefore explain) such a policy. Instead, Commerce justi-
fied its disregard of all of Bosun’s information based on its
determination that the defects in Bosun’s origin-identify-
ing methodology left Commerce with “no reliable infor-
mation on the country of origin of Bosuns sales.” J.A. 3049.
That premise asserts a reliability problem with all the Bo-
sun information. We assess Commerce’s decision to disre-
gard all of Bosun’s information on the basis Commerce
gave for that decision. See SEC v. Chenery Corp., 332 U.S.
194, 196 (1947).
We conclude that Commerce has not satisfactorily ex-
plained why substantial evidence supports its determina-
tion of unreliability of all of Bosun’s origin information.
Commerce has not explained why, as a general matter, rec-
ords other than point-of-sale records are categorically less
reliable than point-of-sale records (both of which may re-
quire verification)—or, therefore, why the entirety of Bo-
sun’s three-step origin-identification process is “not
satisfactory” just because it does not involve point-of-sale
records. Nor has Commerce identified a methodological
problem with the first two steps of Bosun’s identification
process. See J.A. 2891–92. And neither in its Remand Re-
determination decision, e.g., J.A. 3049, 3060, nor in its brief
in this court, has Commerce provided a comprehensible ex-
planation for why, if so, the errors found in Bosun’s sub-
missions have a reliability-undermining effect outside the
category of sales to unaffiliated U.S. purchases whose
origin Bosun identified through the FIFO inference. The
language used by Commerce, especially at J.A. 3049 &
n.37, can easily be understood as limited to the FIFO-
inference step.
This deficiency in Commerce’s explanation appears to
matter considerably to the outcome of this proceeding. Bo-
sun has argued that any absence of or taint on origin infor-
mation lies entirely within the category of sales for which
Bosun relied on the FIFO inference—a category that Bosun
asserts, without apparent contradiction, involves less than
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26 DIAMOND SAWBLADES v. UNITED STATES
2.5% of the sales during the period of review. Bosun Open-
ing Br. at 38–39. The government’s evidentiary argument
for a broader gap or taint is distinctly limited. In its Re-
mand Redetermination, Commerce noted some problems
identified during verification, seemingly limited to the
FIFO-inference step, J.A. 3049, and it stated, in a footnote,
“that Bosun’s errors in reporting physical characteristics
‘affected three out of sixteen transactions identified at ver-
ification, and related to multiple product characteristics,’”
id. at 3049 n.37 (quoting DSMC I, 2018 WL 5281941, at
*8). Whether that statement even refers to an effect be-
yond the FIFO-inference step is not apparent; still less
clear is an evidentiary basis for a finding to that effect. 5
The text of the paragraph in which the footnote appears
suggests that any taint is confined to the FIFO-inference
category of sales. See id. at 3049 (“For this reason, we now
find that, based on our verification process, Bosun’s supple-
mental responses explaining the FIFO methodology were
not satisfactory, because Bosun could have maintained ad-
equate country of origin information for its products in the
first place.”).
We are not persuaded, on the briefing and other mate-
rials presented to us, that there is a supported basis for
finding the Bosun-supplied information unreliable outside
the category of sales for which origin was identified using
only the FIFO-inference step (rather than the two earlier
steps). But we also are not confident that there is no such
basis. We think that a remand is advisable for the parties
5 For the control numbers incorrectly reported in two
sales traces, Commerce’s 2017 Verification Report credits
Bosun’s explanation that “because this control number is
unique to a particular product code, these errors to the
physical characteristics and the control number should not
affect the calculation of the margin for Bosun.” J.A. 2889–
90.
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DIAMOND SAWBLADES v. UNITED STATES 27
to address this focused issue, which may have substantial
consequences for the bottom-line result of the proceeding.
3
Neither Commerce nor the Trade Court misinterpreted
our holdings in Nippon Steel or Peer Bearing regarding the
“best of its ability” standard of § 1677e(b). Before applying
that standard, however, the appropriate threshold deter-
mination under § 1677e(a) requires that Commerce deter-
mine what are “the facts otherwise available.” It is only for
“selecting from among the facts otherwise available,” as
properly determined under § 1677e(a), that § 1677e(b) au-
thorizes Commerce to use an adverse inference. 19 U.S.C.
§ 1677e(b); see Zhejiang DunAn, 652 F.3d at 1346 (“As
these two subsections make clear, Commerce first must de-
termine that it is proper to use facts otherwise available
before it may apply an adverse inference.”).
Nor did Commerce or the Trade Court misinterpret the
governing precedent that, on the facts that properly come
within § 1677e(a) and hence § 1677e(b), the “inference”
that Commerce “may use” in “selecting from among the
facts otherwise available” must “be a reasonably accurate
estimate of the respondent’s actual rate, albeit with some
built-in increase intended as a deterrent to non-compli-
ance.” F.Lii de Cecco di Filippo Fara S. Martino S.p.A. v.
United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) (“[T]he
purpose of section 1677e(b) is to provide respondents with
an incentive to cooperate, not to impose punitive, aberra-
tional, or uncorroborated margins.”); see also Essar Steel
Ltd. v. United States, 678 F.3d 1268, 1276 (Fed. Cir. 2012);
Gallant Ocean (Thailand) Co. v. United States, 602 F.3d
1319, 1324 (Fed. Cir. 2010). If, on remand, it is determined
that, as currently appears, there is no basis for Commerce
to disregard under § 1677e(a) the Bosun-supplied origin in-
formation for the sales to unaffiliated U.S. customers dur-
ing the period of review outside the category of sales
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28 DIAMOND SAWBLADES v. UNITED STATES
analyzed via the FIFO methodology, a redetermination of
how § 1677e(b) applies to this matter will be needed.
III
For the foregoing reasons, we affirm in part, reverse in
part, and vacate in part, and we remand for further pro-
ceedings in accordance with this opinion.
The parties shall bear their own costs.
AFFIRMED IN PART, REVERSED IN PART,
VACATED IN PART, AND REMANDED